I was fortunate enough to spend some delicious time on the Isle of Wight last week. It’s only a short hop over the sea from Southampton, but it’s unlike anything on the mainland. I think the last two decades passed it by. I believe they refer to us tourist “grockles” as “big islanders”.
It’s got marvelous beaches, great walks, but the local food is to die for. It grows the best garlic in the world, the ice-cream is superb, the local beef melts in the mouth, the cheese is… well you get the picture.
My favourite Wight treat is Lobster. Delicious local ones caught just off the shores. So in three days I had three lobsters in very different places ranging from posh, tourist pub to a beach hut. The funny thing is, they were all excellent, and all cost about the same.. which from an economic perspective surprised me.
Lobster 1 was in an historic hotel. It’s recently been refurbished to the highest standards and a Michelin chef taken charge of the kitchens. That man knows how to get the best from a lobster. It was superb, a real fine-dining experience, and cost a very modest £30.00 in one of the most palatial dining rooms on the island, fawned upon by liveried staff.
Lobster 2 was almost as good, cost about £30 and was in a beach-hut café right by a beach with a great view. Lots of tables, lots of happy smiley staff, great throughput and lashings of cheap rose wine.
Lobster 3 was in a noisy pub, full of coach-load tourists ordering lobsters for lunch. It was an equally excellent crustacean, but eating a £30 lobster with a pint next to a cliff-top coach park lacked the cachet of the other places.
Got me wondering… how does place number one, the hotel, make any profit? Their throughput was a fraction of the others, yet must have been the most expensive in terms of kitchen staff, waiting staff, fixed costs etc? The third was almost the McDonalds of lobsters with an industrial production conveying them to the punters – and it felt like it. Meanwhile, the beach-hut was overall the best in terms of total enjoyment because the combo of view, the enthusiastic staff and we certainly drank most there…
I guess I shall never understand the economics of dining. But that’s what makes one investment more attractive than another – a clear understanding of all the factors that make one more profitable than another.
Which brings me on to my concerns about which of these establishments has longevity? How long will the beach-hut, with its clientele of well-heeled yummy mummies, continue to see folk flocking to it? The lobster pub has been there for years and is an established part of every bus tour round the Island. The hotel benefits from the occasional oligarch parking his yacht outside.
One factor is demand. If the yummy-mummy and Parsons Green young family brigades feel the pinch from higher-rates and their soaring credit card balances, then the beach-hut might not be so full next summer. I suspect it would take a more than a modest recession to calm demand at the pub. The first signs of concern for the beach-hut might be visible in London house prices where we are finally seeing signs of weakness. The Bank of England warning of rate rises to come won’t help.
Next week – back to some serious investment thinking. In terms of trade of the week? Well I’d say lobster and chips with a bottle of rose gets my money every time…